Firms advise on first Russian HKSE listing

Sidley Austin, Jun He, Dewey & LeBoeuf and Linklaters have taken the lead Asian legal advisory roles on the landmark IPO of the world’s largest aluminium producer, Rusal. The listing was the first on the Hong Kong Stock Exchange (HKSE) by a Russian company and the second by a European company, after Germany’s Schramm Holding in December 2009.

The IPO raised US$2.2bn for Rusal which was advised on Hong Kong laws by Sidley Austin partner Constance Choy (pictured left).  Linklaters Hong Kong partners Teresa Ma and Jon Gray advised the underwriters, and the firm’s Russian and French offices also gained roles on the offering. Russia’s Egorov Puginsky Afanasiev & Partners advised the issuer on local laws.

In a recent seminar in Hong Kong, Egorov Chairman Dimitry Afanasiev outlined the attraction of Russian companies to the HKSE, who are tapping a new source of capital to develop the Russian economy. “Listing on HKSE opens a new chapter in investment cooperation between Russia and China,” he said. “From the legal point of view, Hong Kong is a leading exchange that imposes strict requirements as to information disclosure and holds companies operating in developing markets in especially high esteem”.

The oversubscribed offering also made headlines for a number of other reasons. Hong Kong’s regulator, the Securities and Futures Commission (SFC), blocked retail investors with less than US$129,000 to the listing, as the company did not meet profit requirements and was deemed too risky.

This action was taken to prevent fallout similar to that from last year’s controversial ‘minibonds’ affair, after the collapse of Lehman Bros. For Rusal and its underwriters, however, the restriction significantly hindered the company’s intention to open the offering to individual investors.

Choosing Sidley Austin to advise on this deal may have been wise for Rusal, since last year the firm gained a key partner in Alan Linning, a former executive director of enforcement at the SFC. Linning also advised on the regulatory side of this offering.

For Dewey & LeBoeuf’s Heng Loong Cheong, who advised Rusal shareholders SUAL Partners, the transaction was significant for other reasons. It marked his first transactional advice given as a partner after being promoted to partnership in 2010. Heng worked alongside lead partner Paul Chen (right) and Stephen Wozencroft, a partner with Dewey’s Hong Kong affiliate, Arthur Marriot & Associates.